Local lore claims a group of Misery Indians, a branch of the Chippewa or Ojibway tribe, settled on the southern shore of Lake Superior in the area in 1845. Toivola was settled by Finns in 1892; they named the community after the Finnish term for the vale of hope, though it is translated as "Community of Hope" on the sign erected by the Michigan Department of Highways commemorating the town's centennial in 1992. Many of the original Finnish settlers came to the United States fleeing the terrible conditions brought on by the Great Famine in the 1860s. In the town's heyday, the population was large enough to support thirteen small schools, including the Heikkinen School and Misery Bay School. The community was originally a logging camp. Toivola once had a station on the Copper Range Railroad. Toivola's post office opened on January 19, 1905; Earl N. Drake was its first postmaster.